// British Land value drops 15% as retailers undertake CVAs
// However, occupancy across retail “remains high at 95%, with all assets open”
British Land has seen the value of its retail portfolio drop as its retail tenants turn to CVAs and the Covid-19 pandemic continues to wreak havoc in the retail sector.
The shopping centre owner, which owns Meadhowhall in Sheffield, said the value of its retail portfolio was down 15 per cent in the first half of its financial year.
A total of 16 occupiers undertook CVAs or fell into administration during the period, which led to an £11.6 million fall in annualised rents.
Despite this, British Land said occupancy across its retail portfolio “remains high at 95 per cent, with all assets open”.
The landlord reported that 86 per cent of stores were open before local and then national lockdowns were imposed and it had been “encouraged by the pace at which footfall recovered” before the latest restrictions.
“Our approach has been both pragmatic and proactive to maximise occupancy and rent collection,” British Land said.
“We are working with successful, financially strong retailers who are additive to our places to agree leasing structures that are appropriate to their business models, potentially including an element of turnover-linked rent and deliver sustainable, long-term cash flows.
“Whilst rents on new lettings and renewals are below previous passing levels, in a very low interest rate environment, this approach of improving the quality of our cash flow will in the long run underpin the appeal of our assets to buyers.”
British Land reported a fall of almost 30 per cent in first-half underlying profits.
Chief executive Simon Carter said: “Our first-half results naturally reflect the challenges in retail. Against this backdrop, we remain focused on active asset management, working to maximise rent collection and keeping our units occupied with successful retailers.
“There is a clear preference from shoppers and retailers for out-of-town, open-air retail parks.
“Our approach and asset mix means that prior to the November lockdown, we were delivering significant outperformance on footfall and retailer sales and a steady improvement in rent collection levels.”